MINISTERS have been warned they risk multi-million pound lawsuits from global corporations when they legislate on key areas — including tighter regulations on the sale of alcohol and tobacco as well as fracking and climate change — if a controversial free trade deal being proposed between Europe and the US goes ahead.
Critics fear the planned agreement, the Transatlantic Trade and Investment Partnership (TTIP), which aims to remove trade barriers to make it easier to buy and sell goods and services between members of the EU and the United States, will result in big business having too much influence on national governments.
They fear bringing in tighter laws in areas devolved to the Scottish parliament, such as environment, food safety, health and workers’ rights, could be deemed barriers to trade and trigger a “race to the bottom” under “regulatory harmonisation” rules in TTIP.
Opponents will next week launch Scotland Against TTIP to fight the move with some 14 organisations including trade unions, environmental campaigners and the Radical Independence Campaign joining the alliance.
They also believe that public services that become privatised would be open to tender by US trans-nationals and subject to legal challenge if governments tried to bring them back into public hands.
Liz Murray, head of Scottish campaigns for the action group Global Justice Now, said TTIP could allow corporations to take legal action under a special mechanism known as the investor state dispute mechanism (ISDS) if a government passed new legislation which businesses regard as presenting barriers to free trade or threats to their current or future profits.
New laws over tobacco and alcohol control as well as climate change would be particularly vulnerable to such legal challenges, she said.
“TTIP is more than just a trade agreement – it’s an unprecedented transfer of power from democratically elected governments to transnational corporations. It’s a threat to the sovereignty of the Scottish Government,” she added.
“There is widespread public concern that TTIP threatens laws to protect the environment, workers and food, as well as public services. It’s obvious that having secret courts that would allow transnational companies to sue the Scottish government over legislation designed to protect the public and the environment is an assault on democracy.”
Alison Johnstone, the Green MSP, said: “The mechanisms at the heart of this trade deal risk overturning decades of democratically agreed social and environmental regulation, which is why I want to see TTIP rejected outright.
“The secret corporate courts which would result from the ISDS will be back on the table when the USA joins the negotiations soon. The economics are questionable, the secrecy is undemocratic and the balance of power will tip further towards big business, so it’s amazing that more politicians are not sounding the alarm.” lawsuits against a number of national governments have already taken place in other countries which have been the subject of similar trade agreements.
Fracking company Lone Pine launched a $230m lawsuit against the Canadian Government in 2011 following Quebec’s moratorium on fracking in 2011 because of environmental concerns.
The firm, which had been issued with fracking licenses before the moratorium, raised the action under the NAFTA trade agreement using the ISDS clause, claiming a threat to future profits.
Tobacco giant Philip Morris has also taken legal action against the Uruguayan and Australian governments over plain cigarette packaging, claiming the move breaches trade agreements in the countries.
TTIP supporters including the CBI and Scottish Enterprise say the deal would boost economic growth as businesses this side of the Atlantic would be able to export more of their products to one of the world’s biggest markets. The UK Government has said it would generate an extra £10 billion a year for the UK.
However Stephen Boyd, assistant secretary of the STUC, a member of the Scotland Against TTIP coalition, said there was little research to indicate any positive outcomes on jobs and wages.
He added: “It is unacceptable that no serious economic assessment has been completed on TTIP’s likely impact on Scotland or that no official authority seems remotely interested in the distributional impact across different parts of Scotland’s economy.”
The Scottish Government has no formal role in the negotiations and ratification of the agreement would be the responsibility of the European Parliament and EU heads of states.
TIPP Negotiations began in July 2013 and are expected to continue for the rest of this year.
In response to public concerns about TTIP, Vince Cable, the Lib Dem Secretary of State for Business, Innovation and Skills, wrote to MPs in September last year rejecting concerns.
He said: “Both the EU and US have committed to maintaining standards at the highest levels, and the EU will retain the right to set regulatory standards that are higher than internationally agreed minima, for example in food. Neither negotiating side is looking to lower standards through the TTIP process. We have not authorised the EU to agree to anything in TTIP that would do that.”
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